Stop Predatory Gambling

Casino Companies Send Workers Home Due to Fear of Tax Increase

by Brent

On Wednesday, the predatory gambling industry halted construction of 2 casinos in Ohio after the state legislature proposed increasing taxes on them. After already spending $200 million dollars on the projects, executives at Rock Gaming and Caesars Entertainment sent hundreds of construction workers home who “were set to begin installing pilings and pouring concrete for the foundation in the next several days.” So what is the priority of the predatory gambling industry: creating new jobs for Ohio workers or ensuring they continue to make loads of money from their predatory business model and highly addictive slot machines? Check out the full story below:

Casinos halt construction in 2 Ohio cities
by Alexander Coolidge of the Cincinnati Enquirer

“Developers indefinitely halted construction of casinos in Cincinnati and Cleveland on Wednesday as an impasse with Ohio officials over future taxes escalated.

Casino developer Rock Gaming and its partner Caesars Entertainment said it makes no sense to continue construction without knowing how much in taxes they ultimately will have to pay.

“This is not an ultimatum — it’s just where we are,” Rock Gaming President Matt Cullen said. “We’re doing this very reluctantly, but felt we needed to do it given the uncertainty. There’s no sense in spending money that could be wasted money.”

Last week, the Republican-led Ohio House of Representatives approved a proposed budget that includes a key tax rule that would mean a much larger bill for casinos under the state’s commercial activity tax, or CAT.

Casinos also are facing off against Republican Gov. John Kasich, who has criticized the 2009 constitutional amendment that legalized casinos as a “raw deal” for Ohio. Kasich has hired consultants to explore his tax strategy and other gambling policies.

The constitutional amendment specified that casino tax proceeds — estimated then at $650 million a year — would go to Ohio’s cities, counties, school districts and law enforcement efforts. Jurisdictions already have discussed spending the money on everything from parks to textbooks to sports stadium costs to Cincinnati’s streetcar.

Cullen said Wednesday that uncertainty about future taxes makes it unwise to establish a physical footprint for Cincinnati’s downtown casino at Broadway Commons. Depending on how the tax questions are resolved, Rock Gaming could be forced to cut back the size of the planned $400 million, 350,000-square-foot complex, Cullen said. Rock Gaming and Caesars have spent $200 million total at the two casino sites, he said.

The announcement idles hundreds of construction jobs. Construction teams were set to begin installing pilings and pouring concrete for the foundation in the next several days.

In April, Rock Gaming canceled a key steel order that delayed the 2012 opening date of Cincinnati’s casino until early 2013.

The next step will be for Kasich’s consultants to devise the governor’s gambling strategy for the state and the General Assembly to complete its budget process, Cullen said. He said Rock Gaming will oppose lawmakers’ bid to tax betting with the CAT tax, but stopped short of saying the developer will sue.

Ohio’s other casino developer — Penn National Gaming Inc., which is building casinos in Columbus and Toledo — said last week it might file a lawsuit to fight the measure, which hasn’t been considered yet by the state Senate. Construction is continuing on those casinos.

Cullen said Rock Gaming hopes to end the dispute as soon as possible and resume construction.

Ohio voters authorized the four casinos in 2009 via an amendment that stipulated casinos would pay a 33 percent tax on gambling revenue, traditional business taxes and a one-time $50 million license fee each. Legal experts say the amendment is carefully worded to block additional taxes and fees, but Kasich and other Ohio officials have advocated getting more money.

Kasich’s office said Wednesday it’s awaiting the findings of its consultants.

“The state has hired gaming consultants to ensure that Ohio taxpayers are being treated fairly, and we look forward to hearing their recommendations,” spokesman Rob Nichols said in a statement.

Rock Gaming officials have become increasingly vocal in the past two months as Ohio officials have raised questions about how to get more taxes out of casinos. The developers say the questions have complicated construction financing.

The House seeks to apply the 0.26 percent CAT tax to total betting at Ohio’s four planned casinos rather than just to net losses by gamblers, the industry’s standard definition of revenue. If Ohio enacted the proposal, a CAT tax bill for all four casinos could be 10 times higher than the $5.2 million developers envisioned.

On Wednesday, Rock Gaming said the House vote and discussions of higher taxes “have created an environment of uncertainty concerning the projected economic vitality of our planned developments in both Cincinnati and Cleveland.”